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If you haven’t already heard of Brad Birkenfeld, then you should take some time to do some reading and brush up on the events surrounding one of the most interesting and large reaching cases of reporting tax fraud in American history.

A whistleblower is someone that registers voluntarily with the IRS for the purposes of reporting IRS tax fraud. Brad Birkenfeld was working for UBS (The largest bank in Switzerland) when he contacted the IRS in order to report perceived violations on the part of UBS in regards to the tax agreements the bank had entered into with the IRS.

The lesson to be learned from Birkenfeld has to do with the definition of a whistleblower. In order to report IRS tax fraud under that program, you have to register with the IRS. However, despite Birkenfeld’s attempt to do so, he was later found to have not met the criteria of that classification. As such, he ended up becoming sentenced to a 40 month prison sentence for his part in the irregularities that had transpired.

The Justice Department tax prosecution in this case stated that they do not participate in the program, and a senior attorney later clarified the definition of someone that can receive protection in cases of reporting tax fraud. The primary basis for denying this protection to Birkenfeld seems to stem from the fact that people must come forward early, and give complete and truthful disclosures in order to be granted any protection. It was judged that Birkenfeld did not qualify.

Despite the outcome in this case, it is clear from the events that transpired that people who are brave enough to step forward and report on tax fraud are very important. They help to ensure the preservation of the laws which have all been put in place for a very specific reason. Evidence of how important Birkenfeld’s actions were thought to be is clear in that he was named “Person of the Year” by “Tax Anaylsts” and when Dean Zerbe called him the most important tax whistleblower of all time.

There are perhaps then two lessons that we can take away from the Brad Birkenfeld case. Obviously in order to get legal protection when reporting tax irregularities, you must step forward early and offer complete truth. The second lesson is that this is a responsibility of all discerning citizens, and Birkenfeld can be held up as an example of someone who did the right thing when he realized the situation that he was witnessing.

Tags: Brad Birkenfeld, irs, IRS tax fraud, tax fraud, tax prosecution, taxes, whistleblower

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